Management Accounting: Types, Methods, and Importance

MANAGEMENT
ACCOUNTING

INTRODUCTION
Management accounting is a process which provides the financial information or
data to the manager so that on the basis of that manager can make decision
accordingly in the organization.. It helps the management of a company in monitoring
the current process and controlling the operational activities. In the current report, the
concept and importance of management accounting has been discussed along with
discussion of various types of accounting. Excite Entertainment Ltd operates in leisure
and entertainment industry in the UK. After that the report goes on to explain the
various methods is used for accounting management reporting and a variety of costs
utilizing different techniques will be detailed in this report. Further, in this report, concept
of absorption and marginal costing will be discussed along with advantages as well as
disadvantages of various budgetary control tools that can be used. Lastly, in this report,
a comparison will be made between the different management accounting systems
which is implemented by organizations in order to solve the financial problems or crisis.
MAIN BODY
Management accounting and different types of management accounting systems
Management Accounting
Process based accounting which provides the financial information or data to the
manager so that on the basis of that manager can make decision accordingly in the
organization. This is the type of accounting which is only used by the internal
management in the organization. As in this process the management of the organization
used to use the financial report and report also invoice financial balance statement (Ax
and Greve, 2017). In simple words, It can be said that in this accounting is the process
of using statistical data to take better decision in the organization. There is no
prescribed structure or the format in which management accounting in the organization
used to take place.
Management accounting and financial accounting is two different type of the accounting
system which is used by the organization.
Basis Management Accounting Financial Accounting
Legal Requirement Management accounting is It is legally mandatory to
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not mandatory to for the
organization to have.
have financial accounting
for all the company.
Format of presentation There is no specific format
for presenting the
information and data in
management accounting.
Financial accounting used
to have the specific format
to present and record the
information.
Area of coverage within
organization
Management Accounting is
only used by the internal
team of the organization.
Financial Accounting is
used by both internal and
external stakeholders of the
organization.
Type of data used Management accounting
used to use both
quantitative and qualitative
data to measure the grid in
the organization.
Financial accounting only
uses the quantitative idea to
measure the grid in the
organization.
Different type of management accounting system
Cost Accounting System:
Cost Accounting system is the accounting system which looks at the cost factor
of the organization. As cost accounting system is the framework used by the
organization to uncerta the cost is critical for the organizational profit (Chenhall and
Moers, 2015). Excite Entertainment should have the proper idea about which service of
the organization is profitable and which one is not profitable. It can be interpreted with
the help of the cost accounting system only.
Importance
 Dis closer of profitable and unprofitable activity
 Help in making future policy
Inventory Management Systems:
As the name of the system suggest, it is the type of the management accounting
tool which used to look at the management of the inventory in an organization. This
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